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tv   Squawk Alley  CNBC  February 22, 2016 11:00am-12:01pm EST

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good morning. it is 5:00 p.m. at the mobile world congress in barcelona. it's 11:00 a.m. on wall street. and "squawk alley" is live. ♪ welcome to "squawk alley" for a monday, joining us, john fortt today is live at the mobile world congress in barcelona. kayla tauschy back here at post
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nine and cnbc contributor and former ceo of the daily mail, john steinberg. john, good morning to you. >> good to be here, guys. >> the market here having a pretty nice monday. dow up 182. stocks essentially in rally mode. oils helping out on a great day for the price of oil, up 7%. of course, you've heard about the pound today and some of these key materials prices getting back to some important levels. in the meantime, apple and ceo tim cook urging the government to withdraw that request to break into the iphone, one of the killers in san bernardino. cook wrote a letter, saying the move would set a dangerous precedent. eamon? >> good morning, carl. that letter to his employees came out early this morning and continued a war of words between the fbi and apple that lasted through the entire weekend. here's what tim cook said in part in his letter this morning. he acknowledged the awkwardness that the company finds itself in now that it is dueling with the
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fbi. cook writing, apple is a uniquely american company. it does not feel right to be on the opposite side of the government in a case centering on the freedoms and liberties that government is meant to protect. meanwhile, fbi director james comey posting his own blog post on a legal blog last night, writing, the particular legal issue is actually quite narrow. the relief we seek is limited, and its value increasingly obsolete, because the technology continues to evolve. so carl, one of the key points here is whether or not this technique, if apple is forced to use it, could be replicated again and again in other cases. law enforcement officials across the country have said they have other iphones they would like to get into, but the fbi very much at pains to make this just about this one iphone that belonged to syed farook, one of the two shooters in san bernardino, california, back in december. they say there could be possibility information on the phone and they simply can't rest until they know what it is,
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carl. >> eamon javers, thank you. we talked about this a day after the story broke. but it's clearly evolving to what comey is saying now. >> cook's reasoning is getting less compelling, to be honest. it seems to me his theory it could run amok and there are hundreds of phones the fbi wants to crack now or local law enforcement wants to crack, it doesn't strike me as compelling. and this issue is a moot issue, in my view. if a terrorist has plans on a phone that have not yet been executed or someone is kidnapped and the kidnapper's phone is recovered and that child or person is still out there, obviously, the ethical conundrum is clear. at that point, you have to open up that phone. so this may be an edge case, but real and present posing daj is not an edge case. >> we try and draw analogies in the physical world and on the website, cook says the digital world is entirely different. if you create a master key like this, it could and will end up in the wrong hands. despite all of the arguments against whether the u.s.
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government should have the ability to override this encryption or override the ability for the phone to self destruct after a certain number of pass codes. it does seem like cook truly believes -- >> yes. >> that within 48 hours, china would have its hands -- >> this is almost like in "a few good men." somebody needs to put tim cook on the stand and say to him, "tim if we have an iphone that has not been executed, will you unlock that iphone." and he would need to have a lot of words to go around to say he wouldn't. that's the question to ask and this whole thing is resolved. >> how about this argument that happened over the weekend that apple is executing a marketing plan. this is really about maintaining sales in other countries? >> i don't believe that. i think that he believes that this would be so damaging to the product and so damaging to user trust and those different things. i don't think it's a marketing gimmi gimmick. i think that's so over the moon. i think he thinks it will be really bad for the company and bad for user trust. but i don't think there is some
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terrible capitalist desire baked into this. >> could you see any situation, though, between now and friday when apple's formal legal response to the fbi and to the court that ordered them to respond to the fbi? do you think there is any way the company's stance changes or that the situation evolves so their position is different? >> well, the thing is, i'm watching andrew ross on billions where they come into the office -- >> don't spoil it. minchts question for eamon, does the fbi show up at the office, do they take tim cook away in hand cuffs? could that happen? i mean, it seems to me that would be pretty amazing. >> eamon, i think you are still there. >> i am. >> we haven't gained this out to a raid on apple -- or contempt of court. >> we're going to test my legal knowledge here. i think that that is, at least theoretically possible at some point if you have a court order. the interesting dynamic here, though, what apple would be required to do is not just turn over data that it already has. but to write new software that
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does not exist right now. and the question is, how would those guys in the wind breakers you're talking about walk into apple and force them to write the software? that gets into a very weird area here. and that's why apple is arguing in part this is unprecedented. they would have to create something that simply isn't out there right now. and they say would be dangerous if they did. >> that is the key difference in this case. not like turning over something you already own. as apple would argue. eamon, thanks. we're going to move on here. plenty of news out of barcelona at the mobile world congress. our john fortt has already had a busy day there. hey, john. >> reporter: hey, carl. yeah, i mean, there's been a lot about virtual reality, phones. but an important topic certainly in the air here is what we were just talking about. apple versus fbi. i just talked to intel ceo, about that. intel has its own security division, intel security formerly known as mcafee. and he took the issue straight on. take a listen.
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>> i can i think there is a balance here between those two. i'm absolutely not in favor and don't believe we should do back doors. but there probably is a way that working together with agencies we can find a way to get them the data they need to really protect the citizens from the terrorists. and i think it's best when the engineers get together and actually solve the problem, rather than the escalation. >> reporter: if we can get to the engineer solving the problem, it will certainly be a different point from where we are here. but beyond that, of course, samsung introduced the galaxy s7 last night, also the gear 360, which is a camera that can take immersive 360-degree video. htc, which is right over here behind me. has their own vr setup they are talking quite a bit about here. and mark zuckerberg is going to take the stage in a few minutes and address a lot of these topics. we also expect to hear him talk about facebook's plans to bring
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to areas of the country that don't have it all. to create wireless networks in entirely new ways to do that. and, of course, we've got ralph de la vega, at&t's ceo of business international will join us in "squawk alley" in a couple minutes to talk about international expansion, as well. so busy times here in barcelona, carl. >> that floor looks absolutely hopping, john. thank you for that. our john fortt in barcelona. and as jon mentioned, one of the highlights here is zuckerberg, showing up to speak about vr. zuckerberg posted this picture on his facebook page after the event, which has been widely talked about on twitter. you see zuckerberg coming down the aisle, everyone in the house wearing headsets. is this the future, john? >> i'm reminded of the neil stephenson line where he says "the sky above the port was the color of television tuned to a dead channel." or even, you know, "snow crash." that book about the met averse we all live in. zuckerberg is building a social
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vr team. that's what he announced there on the samsung stage. so it makes me think we're going to have some 3-d world we're all walking around in, as our overlords walk past us, all jacked into these systems. >> it's an overlord nature of that picture that has drawn some criticism to what happens when everyone is in their own world, created by these leaders, whether technology or governmental leaders. and you're not really aware of what they're doing in the background. >> i think that he posted that picture thinking, wow, this is a really funny picture. i'm surprising that i'm all coming up stage while they're jacked into the system. in reality, it's just like we are kind of all of these oblivious, like kind of sacks of sauce. almost like the movie "wall-e." >> or "the matrix" where we're batteries -- >> the matrix reference -- somebody should do a meme mashup with these people. >> this is a water shed moment, at least for the mobile world congress. five years ago would have been hard to imagine a world like
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this. >> a big post at the end of last week about what's next in computing. it's in the guaranteed that vr is what's next in computing, but it certainly feels like it. and the fact that facebook is taking this big bet on vr, thinking it might be next i think is bullish for the company. they're investing this capital. it sdnl looks like we're all going to have this stuff in a few months. samsung has a version that comes free if you buy the 7. it doesn't need a computer. it's the near now. >> although when you look at a picture like that, it just drives home the point that the experience appears distinctly antisocial. when you're living within this fear of whatever is in front of your face, you are not interacting with the people next to you. >> look, it's a dystopian picture. there is little doubt about that. and i think that google has this big bet on magically, which is this hybrid virtual reality/real reality. it's something on your face. >> is that how you want to watch a football game? >> me? you're asking me? yes. -- >> do you want a ball game at
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all? >> first of all, i don't want to watch a football game. is that the way i want to watch hamilton if i can't get to the theatre? yeah, i think it's pretty cool. i preordered it. it goes one of two ways. either we get made fun of or the mainstream does get it. and i think everybody is going to have one of these in a few years. >> google lessons aside. you think this is going to happen. >> i thought that google glass would be huge. my only track record, i do think that everything will be huge. so -- >> your gadget graveyard speaks for it is. >> mark zuckerberg has a good track record. that maybe the version the geeks get and everybody making it a lighter weight version. if you're sitting at home and doing this with your phone, that's a better version of this. >> john, good seeing you. don't go too far around the room. >> bye. when we come back, at&t announcing a new deal with intel to dramatically increase the range of drones. the ceo of at&t business solutions will join us in barcelona. and rumers of the yahoo! sale
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getting a big boost today. and a top republican congressman in a fight against the fbi. congressman darrell issa joins us live to explain why. don't go away.
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welcome back to "squawk alley." i'm jon fortt here in barcelona at mobile world congress with
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ralph della vega, ceo of business for at&t. and i believe you've got some news. >> we broke the news we signed a multiyear exclusive agreement to be the provider for porsche cars. it's on the heels of announcing we reyou said the audi contract and for the first time connecting gm's cars in europe. so our internet car business is booming. we now have 10 of the top 50 manufacturers in the world signed up with us. and it's the confidence i thought we would have that we could grow it in a big way. >> how does this fit into at&t's broad are business? i would assume that when somebody has got a car they actually connect to your network, they're less likely to turn their phone off of your network. you get a bigger share of wallet overall. what are you seeing thus far? >> that's exactly what we have seen. at this point with the directv
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acquisition, jon, i think the world's best provider. so we can give a customer what they need. whether it's connecting their cars, securing their homes with home security, broadband, wireless and tv. and we think that more customers sign up with us for those services, the better the return, the more loyal they are to us and a great model for the customer, as well. >> reporter: and you want them to connect their drones. >> we want them to connect their drones if they have them. we announced an agreement with intel to connect their drones. this is really important from a safety point of view. you want to make sure that those drones when they fly out of range, out of visible range, could still be able to control them, along with the regular frequencies used for wi-fi. they have a wide area connectivity. they can always be talked to, always controlled. and this is the same thesis we practice with autonomous cars. autonomous cars are great, they're going to be super huge in the future. but you want to always have a link to connect and talk to them
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no matter where they're at. >> reporter: safety is important, security also important. apple versus fbi is a topic that a lot of people are talking about. even here in barcelona. does this particular case change the conversation at at&t's level, at the carrier level about what the acceptable level of access for the government is? >> i think it changes the conversation for everybody, jon. it's a very interesting case. our personal view on this is that there has to be a balance between privacy and security. right now the laws are a little muddled. we think congress should take the leadership role in setting up clear laws to be followed by the land. that balances the security with a privacy aspect for the citizens of the country. i think that's the right way to settle it. >> reporter: versus doing it in the courts. >> versus doing it in the courts or any other form. i think we need to do it in a way that balances those two rights for the benefit of the people of the united states. >> reporter: you've talked here about investing $10 billion, i believe, in at&t's global
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network. what's different about the approach you're going to take with that $10 billion? talk about software defined net working and what that allows you to do, to pursue markets. >> the beautiful thing, we're leading the world on this. we can give customers our top enterprise customers, and we serve nearly every single fortune 1,000 form globally. the capability to give the same services no matter where they are in the world. and their software-driven services. the whole economy is moving to the cloud and software-based services. we can give those customers the same service they could get in the u.s., mexico, in australia or europe. and that's what customers are asking us for. by the way, that $10 billion investment is in 2016. i wanted to point out one thing for you on our investments. in 2015, we invested $7 billion in mexico. and we invested in mexico, because we like the fact that mexico has a pro investment policy. they just announced today that the foreign direct investment in
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mexico went up 25% last year, and they said their reason for that is at&t. the reason that is so critical, as we look at 5g and the internet of things, it's going to require us to invest in our networks. we were willing to do so when we have assurances that we could earn the right return of those investments. so a pro investment policy, regulatory process, is critical. >> quickly, if you can. american airlines, not happy with go, go over in flight internet service. that is an initiative you guys almost jumped into and dropped when you pushed international. any chance you're going to jump back into that business, since it seems like the providers in there now, at least aren't pleasing everyone? >> that's an area i think has to be improved. at this point, we're not going to comment on any speculation. >> well, i always have wi-fi on my flight. hopefully somebody gets it right. ralph de la vega, business international arena. >> great to be with you. >> back to you, kay l.a. >> thanks. we'll see you later on this
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hour. next, new details on the future of yahoo! including potential buyers. plus a top republican backing apple in its fight against the government. congressman darrell issa joins us live later on this hour. "squawk alley" will be back in a moment.
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after yahoo! created that new committee of independent directors to look for strategic alternatives, there are now reports the company could approach potential buyers as soon as today. bloomberg and the "new york post" reporting verizon, at&t and comcast, cnbc's parent company are interested along with bane kkr and tpg. the post also reporting that at the same time,ia yao has quietly been hiring advisers that specialize in fights against
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shareholders. jeff smith has been involved in the yahoo! situation, being vocal about what yahoo! should and shouldn't do. carl, the plot continues to thicken. >> you've got to keep one eye on that whole process, along with the remedies they're trying to make to the core product. and signs that traffic and clicks remain challenged. >> it's hard to think of another company in so many fires at once. >> this is getting a lot more interesting. when we come back, more on apple's fight against the fbi with a charmer chief technology officer of the united states. anearby chopra joins us live. a tight range up 192. dow and s&p positive for the month. out of what they sometimes call correction territory. next thing to watch today, of course, is the close in europe. just about five and a half minutes away. back in a minute.
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good morning, everyone. i'm sue herrera. here is your cnbc news update. libya's government forces say they have pushed back in several areas of benghazi. dozens of militants and 20 soldiers were killed as the army carried out a number of attacks. libya is rapidly turning into the new front in the fight against isis. americans drove 4% more miles in december than they did a year ago, according to the
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department of transportation. and you can credit falling gas prices. at 268 billion miles, december's volume was an historic high for the month. starbucks is changing the terms of its rewards program so that consumers who get just a regular cup of coffee will have to spend significantly more to earn a freebie. starbucks says it has 11 million loyalty program members in the u.s. taylor swift has donated $250,000 to keisha to help with her legal battle with dr. luke, the mega hit producer. keisha says he assaulted her, and she wants out of her contract with him. and sony, as well. but a judge on friday denied her request. and that is the cnbc news update this hour. back down to "squawk alley." carl, back to you. >> thank you very much, sue herrera. let's get over to seema mody. >> hey, carl. positive session in europe. it's really the political development centered around the u.k. that has a lot of people talking. david cameron currently making a
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plea at the house of commons as to why britain should stay in the european union. it's interesting, right? you would think david cameron securing a deal would alleviate concerns, but the exact opposite has happened. concerns rising after a key politician who has a heavy influence, london mayor boris johnson, declared his support ahead of the upcoming referendum in june. the pound hitting a seven-year low, witnessing its biggest one-day drop in more than a year. and a debate over whether britain should stay in or out of the e.u. is weighing on the eurozone currency. the economic costs of britain leaving the e.u. would outweigh the benefits and other experts say it could disrupt business and lead to a contagion effect. other countries following britain's lead out of the european union. so those worries sending the euro down to around 110 against the u.s. dollar. but despite the volatility we're seeing in the currency markets, european stocks are higher across the board.
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that's due in part to the rebound we're seeing in oil prices. the basic resources and miners are gaining today. anglo american glen core seeing a sharp rally on the sharp trade for the week. >> seema mody with the european close back at headquarters, thanks. apple's ceo, tim cook, doubling down in an e-mail to employees this morning, following a blog post yesterday by fbi director, james comey, on why apple needs to comply with the request to unlock the phone of the san bernardino killer. weighing in on this heated battle exclusively is former technology officer to the u.s. government, aneesh chopra. good to have you this morning. >> thank you for having me. >> in the blog post by director comey, he says we don't want to set a master key loose on the land, but then tim cook, ceo of apple, basically says it would be impossible not to. how do you reconcile two such
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diametrically opposed positions here? >> there has been a pretty thoughtful technical debate about what is being asked here. and it comes down to this. what is asked of apple is that they essentially sign a piece of software that would allow this particular action to happen. that idea of signing software and what it is you're trying to install, it is conceivable that that information could be found in other people's hands. and as that happens, the ability for other entities to write their own version of apple software and upgrade our own phones, just puts a lot of us at risk. and so the policy tension that's been sorted out here for the last several years is, where's the line between the price that all of us will pay by having any of those capabilities out in the wild against the benefits, which we all desperately want to have happen, which is that law enforcement be given every possible avenue of information to keep terrorists at bay. that tension is a public debate,
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and you saw the president rule earlier this year that he was not going to ask congress for expanding powers, and now we're in a situation where a court will make some judgments that we couldn't get reconciled in the political debate, at least not yet. >> the debate, aneesh, also is that it's one thing for the government to ask for companies' help to retrieve certain information. apple says it's already complied to the largest extent it could. it's another thing entirely for the government to ask a company to build a product that doesn't exist to that end. what would you say to that? >> this is the race we are watching before our eyes. if you have something and there's a subpoena, you must share it. so what happened in this case? apple had access to the backup phone and the icloud system, which they happened to have a key for. and that meant that they had to turn that over, and they have and they will. as do others that are subject to those kinds of court orders. but the engineers are now wondering, to what extent they can start encrypting more and
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more of what they previously had. so every day this conversation is happening, more and more the information they previously had is going to be encrypted where they can say they don't have it. so this is just one story about what we can do in this particular case. but the race is unequivocal. we are moving to a point where engineers are designing systems where the companies don't have the data itself, and each week, each month, each year that that happens, it will be harder and harder to get to this point. the precedent is set we can actually mandate, not that you just do whatever you give, whatever you have, that you actually have to rewrite your systems to get what you previously couldn't get that. that's the test for this case and why you're seeing the apple ceo quite adamantly about this setting precedent. >> aneesh, are you more worried about the potential for law enforcement to engage in so-called mission creep? in other words, that slippery slope of asking for more and more surveillance aid? or the acquisition of this
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technology by rogue actors? which is the bigger danger? >> oh, there's no question in my mind. we have a much bigger concern about the rogue actor threat. if -- think of the honey pot would be created if they knew that such a capability was possible. it would be like a race amongst all the evil-doers in the cyber security land to find out how apple did it. and this idea of the apple code signature being sort of sack row sank and only apple knows how to do it, engineers are looking at hard it is -- or how it's possible to basically spoof that code signature. so if people thought there was a way and they knew that it worked, now imagine in the legal system -- if you're on the defense counsel side, my guess is you're going to ask for discovery, how did this actually work, did it not work. employees who worked on this might go rogue. who knows the circumstances. i'm not as concerned -- we have law-abiding -- our law enforcement is world-class. and we have great confidence
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they follow the rules, and i am very -- i believe it's a high capability there. but for the others in the system, it's just going to create a lot of havoc. and there already is pressure. cyber security is already a race. this is just going to throw a terror on that race in this particular domain. and here's the other point. and i just leave you with this. imagine if you're an evil-doer. that is to say, you're looking at making -- you're looking at terrorist actions in the u.s. maybe you don't use the apple products, but instead you switch to a foreign-built operating system, which is completely dark. and so you have unintended consequences that are worth considering, which is why as a policy matter, the president did not ask for this concept of a back door. and i know we're trying to separate -- well, this is a one-time thing and it's a short-term thing. but you just can't do it, given the secondary ramifications here. >> well, and perhaps, aneesh, that is exactly why tim cook has suggested the creation of a panel of experts, a commission
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of sorts, to explore some of those unintended consequences. i'm wondering how you see that type of commission, if, in fact, the government does pursue that. how much tension could that diffuse, and what type of facts could something like that discover? >> well, let me just say three simple things. number one, we had a version of this already run by the president. and i have high confidence with the leadership of the technology team, that are world-class experts on these issues. they have been debating this, and that was a policy process. look, if there was a way they could figure out how to provide more law enforcement access without compromising our collective privacy and our security, they would have pushed for that. and it was hard for them, with the data and the facts they could find to do it. so point number one, we have had a version of that already completed. number two, i'm a huge fan of senator mark warner. he and congressman mccaul are looking to create this commission, which is maybe more
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of a public discussion about this issue. and that may be a useful thing to do. so some of the stuff that was done in a behind the scenes -- by the presidents could be done in a public forum. that's useful. and three, we live in a country where congress makes these laws and the president signs them or chooses to reject them. congress would have to weigh in on this. right now, relying on a 1789 statute to make this broad policy implication is a complicated web. and this means updating and modernizing a law. we have not been successful in getting a congressional discussion. but that's what's needed desperately to move forward. >> it's hard to say there is any consensus on this matter. it has been so divisive. aneesh, we so appreciate your perspective this morning. >> my pleasure. thanks for having me. >> aneesh chopra, former u.s. chief technology officer. and speaking of apple, one top republican supporting the company in its fight against the government, congressman darrell issa, will join us live in just
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a few minutes. when we come back, still watching the market stocks in rally mode all morning. the dow up 206 points. rick santelli, what are you watching today? >> i'm watching interest rates. and definitely, they're not skyrocketing. still down pretty much of a boatload since the beginning of the year. but have downward pressure on interest rates reached its crescendo? we're going to talk about that in the context of the stock market recovery. after the break.
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time to get back to chicago. rick santelli and the santelli exchange. >> thanks, kayla. everybody watching the substantial stabilization, at least of late and the upward price of the crude market today. energy. because energy seems to be going hat in hand with the performance of the equity markets. now, we could spend a long time debating why that is. but let's take it at face value. let's take another thing at face value. one of the best hedges for weak stocks is buying treasuries. and buying treasuries pushes yields down. what i really want to get at today is what was a common thread where we had all the weakness at the beginning of the year, much of the weakness ended over the last six or seven sessions, have equities, as you heard on cnbc, are now positive for the month of february. so let's go to the charts for a minute. if we look at the low that was established in january of 2015,
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it was around 146. if you look back, not that many weeks ago, 11th of february, 166 was the low. and that was an interesting session. because not only was the settlement close at 166, but the intraday low was many basis points lower at 152, 153. right there is a red flag. we put that as a key day. when you look at in tandem with the double bottom aspects, you think could this be bottom the. were equities mispriced with regard to their activity and the economy? that was the dynamic everybody was talking about? i contend there was a time not that long ago where stocks kept going up, even though maybe the fundamentals weren't as aggressive. and interest rates still remained rather low all things considered. so then you get the big drop in rates into 2016, which was in large part the catalyst was weak equity. so my point here is, has the bond market priced in too much
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weakness, domestically and globally for economies? and the answer could be yes. i had peter cher on this morning, smart guy. really smart when it comes to high yield and leverage and investment grade and how all of that figures in with the equities. so i guess i'm going a little further down the road. if you do believe that maybe treasuries have overpriced and that the writing of equities here could open that up a bit, what you want to do is, you want to base pretty much all your stops on going the other way, based on these yields. where could we end up going? well, i still contend we settle at 277, and 217 from the year before was a key area. so i would think that 217 is your wide range. but we all know the most important level psychologically is 2%. so put your stops under 164, and let it ride. that's what the technicians are saying at this point. carl, back to you. >> all right. >> thank you very much, rick
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santelli in chicago. congressman darrell issa will join us live next on "squawk alley." man 1: [ gasps ]
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man 1: he just got fired. man 2: why? man 1: network breach. man 2: since when do they fire ceos for computer problems? man 1: they got in through a vendor. man 1: do you know how many vendors have access to our systems? man 2: no. man 1: hundreds, if you don't count the freelancers. man 2: should i be worried? man 1: you are the ceo. it's not just security. it's defense. bae systems. apple continuing to defy that court order to help the fbi unlock the phone and one of the san bernardino shooters. the war of words is escalating. fbi director james comey issued a statement, saying in part, we don't want to break anyone's encryption or set a master key loose on the land. but in a letter to apple employees today, ceo tim cook says, quote, this case is about much more than a single phone or
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a single investigation. at stake is the data security of hundreds of millions of law-abiding people. we're going to bring in sara eisen here, and joining us with her, along with her, republican congressman darrell issa, member of the house judiciary committee, which has asked apple to testify at a hearing in march. sara? >> congressman issa, welcome to "squawk alley." good to have you here. >> well, thank you, sara. and thank you for covering this important issue. you know, there is no question that this is a bigger issue than one dead man's phone, and the possibility that there may be some information on it. >> well, let's just step back and go to your website, which you say requiring apple to unlock this iphone is, quote, unlawful, unwise and unsafe. why are you saying that? >> well, i think, sara, it goes past that. it's not unlocking it. it's not like, you know, here, here's the cloud. they have already given the information they have. they have already executed what they can execute. what they're being asked to do is to develop a back door and
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hand it over to the fbi. that, in fact, is way beyond the -- if you will, the interpretation and statute that goes to 1977. it is burdensome to say we want you to develop software. and sara, let's put it in perspective of the industry. the fbi, the nsa, they can hire former apple or nonformer apple people. they can subpoena the source code. and they can try to crack it. but what they're actually asking is they're asking a company to create their own back door. >> correct. >> and then maintain it will be the next request. >> but the reason why they're doing that is because they're trying to find out information about a terrorist. and the words of james comey, who is the head of the fbi on law fair, writing in an op-ed, 14 people were slaughtered and many more had their lives and bodies ruined. we owe them a thorough and professional investigation under the law. that is what this is. the american people should expect nothing less from the
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fbi. >> you know, it's amazing that the fbi can find no crime when it's the administration, but they can take away constitutional protections if they can. this is a 1789 statute. it was never intended to do this. but even if you were to look at our founding fathers, our founding fathers did not want to have the ability to look inside every home before they got a warrant. every home before they knew there was a specific crime there. remember, this is, in fact, an issue in which the united states congress has been asked to consider changing laws, updating laws, and we have done so. and we have never been asked to, nor have we updated laws related to this all writ type of a warrant. the fact is, americans should not be forced to perform labor, to do something that they don't already have the ability to do. if apple had the ability to unlock the phone today, then, in
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fact, asking them to do it would not be burdensome and wouldn't violate any of the tenets. asking them to develop a vulnerability to -- based on something that may or may not be on this phone goes a long way toward tens of millions -- hundreds of millions of people having their phones at risk. the fact is, the nsa and other agencies have developed back doors. they have used back doors. they have spied. there is no question that this kind of activity goes on. but when apple developed something to give confidence to its owners that, in fact, they have a level of security to make them undo it would be a slippery slope that congress has to act on, not simply an fbi director finding a 200-plus-year-old law and trying to use it. >> well, congressman, this is kayla tausche and part of the reason why apple has acknowledged this as a vulnerability, it could, in fact, end up in the nnds of not
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the u.s. government but other rogue and oppressive governments around the world. and adding to apple's argument is the fact that the u.s. government itself has been subject to data breach, as the irs, the office of personnel management. and i'm wondering what the government is doing, if, in fact, this could end up in the fbi's favor, if they do win this, what is the government doing to safeguard its own databases to make sure this is not a vulnerability? >> i think you're hitting on a very important point. i carry an iphone. almost every member of congress carries an iphone. blackberries have almost gone away. apple products. so every member of congress relies on that same level of security. and let's remember, they do not know what's on this phone. there may not be anything of any importance. and they have the presence of the phone. there are ways to do brute force attack on this phone that could forensically be done by u.s.
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agencies. what they're trying to do is force apple to create a shortcut. and i have no doubt in my own mind that, in fact, they want the shortcut here, because this is a good excuse for a heinous event that justifies it. but there is no question at all. if apple complies voluntarily, they will be forced to do it again. if the court rules they must do it, then it will be a slippery slope to where almost anything can be ordered to be done by almost anybody who has the technical ability to develop it on behalf of our country. and that's not the history of how americas work. we have not ordered people by the court to perform tasks, to develop a technology, and back in the 1970s, when the last case came through, we were simply talking about executing something that in the ordinary course of business a telephone company could do. that's a long way from asking someone to develop software, to undermine the security of their own software. >> congressman, a lot of people
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have recommended we take this back to the hill. whether it's judiciary, whether it's energy in commerce, what is the path to have any kind of hearing, create any kind of answer to this problem? >> well, i mean, there is no question, it's judiciary. the authority to interpret the constitution and to grant laws which are constitutional or change the constitution all lies within the judiciary committee. this is not about encryption. this is about americans' constitutional rights to have security, to ask for it, and to expect it. the fact is, i understand why the fbi would like to have this authority. but let's remember, the fbi back in the '90s was arguing not to have 128 bitten description, and it wasn't until microsoft and other companies' softwares were being hacked everywhere that they finally relented, congress acted and lifted that bar. we have had a long history of law enforcement wanting you not
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to have security, while, in fact, they won't answer your questions. you know, one of the biggest problems that we face in washington is, since 9/11, we know a lot more about you than you know about your government. and government likes that. but that's not what the american people want. it's not what our constitution envisioned. i'm all for cooperating, and i expect apple to cooperate to the ability they have. but when apple says to somebody, we're giving you endescription, it's in our software, it's protect, you can't be hacked by the chinese or russians or french or whoever, they should not be forced to undermine that. and let's remember, other companies outside the u.s. would not be vulnerable to the u.s. courts. so what we might do is ultimately drive companies like apple and the android operating system out of google and drive them to another company who will simply say we'll give you what the americans won't give you. is that what we really want is
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for our best technologies to be overseas and our en technologies to be inferior? >> it's an interesting point you bring up on competitiveness. speaking of what americans want, the current presidential front runner for your party, donald trump, has actually called for a boycott. he doesn't agree with you. your thoughts on his strong win in south carolina? i know you've been a supporter of senator rubio, who has not won a primary or a caucus. how do you see him taking down donald trump? >> well, you know, donald trump is to a great extent a little bit like a congressman i serve with, todd akin. when he became a congressman, he got about 25% of the vote in a crowded race. then he got 30-some percent in a crowded race for senate. and then people found out he wasn't a very good candidate even though in a crowded field he could get about a third. donald trump is in a crowded field. so, yes, he cuts out a segment of about 30%. and it's caused him in a crowded field to look good. but if you look at all the other candidates, and you ask, if not
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for this candidate, who would you vote for, what you discover is, it's really a 70/30 business -- 65 or 70% of the american republican electorate would vote for somebody other than donald trump. >> congressman, we have to leave it there. thanks for joining us in and weigh in on this important issue. congressman darrell issa from the 49th district of california, carl. when we come back, mark zuckerberg set to take the stage. our jon fortt is there live with what to expect in a moment. the future belongs to the fast. and to help you accelerate, we've created a new company... one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise.
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welcome back to "squawk alley." i'm jon fortt here in barcelona at mobile world congress where mark zuckerberg is getting ready to take the stage. expect to hear him talk about bringing the internet to places that don't have it at all at this point. new technologies and new partnerships, facebook is prepared to do that. and also free basics, the program that just had a defeat in india over net neutrality issues. also, facebook has backed apple in its fight versus the fbi on encryption and back doors. we'll see if he says anything about that when he talks to wired's jesse hem pell in just a few minutes, guys. back to you. >> amazing, jon, that this
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year's mobile world congress is colliding with discussions we're having about encryption and vr. great stuff. and a lot more coming up throughout the course of the week. in the meantime, markets hanging on to close to session highs. let's get over to headquarters. scott wapner and the half. ♪ carl, thanks so much. welcome to the halftime show. let's meet the starting lineup. joe terranova with josh brown. pete najarian, and so is bill nichols, head of u.s. equities. our game plan looks like this. checking out why scott debit cut trip adviser and expedia to sell today. with us live, as both stocks are under pressure. the missing link the transportation stock stephanie just bought, she's going to join us with the big reveal. and the reasons why she did it. stocks sharply higher this hour. now positive for the month, led by higher crude

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